Padilla v. City of Richmond

Decision Date23 December 2020
Docket NumberCase No. 20-cv-04597-PJH
Citation509 F.Supp.3d 1168
Parties Luis PADILLA, Plaintiff, v. CITY OF RICHMOND, Defendant.
CourtU.S. District Court — Northern District of California

Isaac Sean Stevens, Tashayla Danielle Billington, Taylor Johnna Davies-Mahaffey, David Emilio Mastagni, Mastagni, Holstedt, Amick, Miller, Johnsen & Uhrhammer, Sacramento, CA, for Plaintiff.

Bruce Soublet, Berkeley City Attorney's Office, Berkeley, CA, Jesse Jeremy Maddox, Liebert Cassidy Whitmore, Fresno, CA, Lisa Simone Charbonneau, Liebert Cassidy Whitmore, Rachel Hannah Sommovilla, Bingham McCutchen LLP, San Francisco, CA, for Defendant.


Re: Dkt. No. 18

PHYLLIS J. HAMILTON, United States District Judge

Defendant City of Richmond's ("defendant" or "the City") motion to dismiss came on for hearing before this court on December 9, 2020. Plaintiff Luis Padilla ("plaintiff") appeared through his counsel, Tashayla Billington. Defendant appeared through its counsel, Jesse Maddox, Lisa Charbonneau, and Bruce Soublet. Having read the parties’ papers and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby rules as follows.


On July 10, 2020, plaintiff filed a putative collective action complaint alleging a single claim for violation of section 7 of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 207. Dkt. 1. On July 13, 2020, counsel for plaintiff filed sixty-one individual consent affidavits pursuant to 29 U.S.C. § 216(b). Dkt. 7. On September 8, 2020, plaintiff filed a first amended complaint ("FAC") alleging the same violation of section 7. Dkt. 16.

Plaintiff and the other putative members of this collective action are fire trainees, fire fighters, fire engineer fire captains, fire inspectors, and deputy fire marshals (collectively, "firefighters") employed by defendant. FAC ¶ 15. Plaintiff and the firefighters are members of the International Association of Firefighters, Local 188 ("Local 188") and the terms and conditions of employment of Local 188 members by the City are governed by a memorandum of understanding ("MOU") agreed to by Local 188 and defendant. Id. ¶¶ 14, 16.

Local 188 members are assigned work schedules consisting of 48 hours on duty, followed by 96 hours off duty, referred to as the 56-hour workweek. Id. ¶ 18. In addition to their base salary, defendant compensates firefighters working a 56-hour workweek with monetary compensation in lieu of paid idle holidays (the "holiday-in-lieu payments"). Id. ¶ 19. Thus, firefighters are paid for each of the City's thirteen holidays at a rate of twelve hours per holiday and the holiday-in-lieu pay is paid in two annual lump sum payments. Id. Additionally, defendant provides monetary compensation in lieu of contributing towards the City's health insurance (the "cash-in-lieu payments"). Id. ¶ 22. Both the holiday-in-lieu payments and the cash-in-lieu payments are treated as wages for the purpose of applicable tax withholdings. Id. ¶¶ 20, 23.

Plaintiff alleges that defendant suffered or permitted him to work hours beyond the statutory overtime thresholds, triggering defendant's obligation to pay plaintiff overtime compensation as required by the FLSA. Id. ¶ 25. Plaintiff further alleges that defendant impermissibly excluded the holiday-in-lieu pay and the cash-in-lieu pay remuneration from the "regular rate" of pay. Id. ¶ 27. Defendant also failed to pay plaintiff for cashed out compensatory time off at the "regular rate" of pay as required by 29 U.S.C. § 207(o)(3)(4). Id. ¶ 28.

Defendant moves to dismiss plaintiff's claim pursuant to Rule 12(b)(6) only with respect to the holiday-in-lieu compensation. Dkt. 18.

A. Legal Standard

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock Inc., 349 F.3d 1191, 1199–1200 (9th Cir. 2003). Under Federal Rule of Civil Procedure 8, which requires that a complaint include a "short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), a complaint may be dismissed under Rule 12(b)(6) if the plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to support a cognizable legal theory. Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013).

While the court is to accept as true all the factual allegations in the complaint, legally conclusory statements, not supported by actual factual allegations, need not be accepted. Ashcroft v. Iqbal, 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The complaint must proffer sufficient facts to state a claim for relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 558–59, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]‘that the pleader is entitled to relief.’ " Id. at 679, 129 S.Ct. 1937 (quoting Fed. R. Civ. P. 8(a)(2) ). Where dismissal is warranted, it is generally without prejudice, unless it is clear the complaint cannot be saved by any amendment. In re Daou Sys., Inc., 411 F.3d 1006, 1013 (9th Cir. 2005).

Review is generally limited to the contents of the complaint, although the court can also consider documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (quoting In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999), superseded by statute on other grounds as stated in In re Quality Sys., Inc. Sec. Litig., 865 F.3d 1130 (9th Cir. 2017) ); see also Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007) ("[A] court can consider a document on which the complaint relies if the document is central to the plaintiff's claim, and no party questions the authenticity of the document." (citation omitted)). The court may also consider matters that are properly the subject of judicial notice, Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir. 2001), and exhibits attached to the complaint, Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989).

B. Analysis

Section 7 of the FLSA, codified at title 29 U.S.C. § 207, generally requires employers to pay overtime to their non-exempt employees for hours worked in excess of forty hours in a workweek at a rate that is at least one-and-a-half times the "regular rate" at which he or she is employed. 29 U.S.C. § 207(a)(1). The "regular rate" must include "all remuneration for employment paid to, or on behalf of, the employee." 29 U.S.C. § 207(e). The statute expressly excludes certain types of compensation, including as relevant here:

payments made for occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, or other similar cause; reasonable payments for traveling expenses, or other expenses, incurred by an employee in the furtherance of his employer's interests and properly reimbursable by the employer; and other similar payments to an employee which are not made as compensation for his hours of employment.

29 U.S.C. § 207(e)(2).

The City, as plaintiff's employer, bears the burden to show that a particular exemption applies. Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 206, 86 S.Ct. 737, 15 L.Ed.2d 694 (1966) (citing Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960) ). Prior Ninth Circuit opinions have held that the FLSA's exemptions "are to be narrowly construed against the employers seeking to assert them." Cleveland v. City of Los Angeles, 420 F.3d 981, 988 (9th Cir. 2005) (quoting Arnold, 361 U.S. at 392, 80 S.Ct. 453 ). However, in Encino Motorcars, LLC v. Navarro ("Encino II"), ––– U.S. ––––, 138 S. Ct. 1134, 1142, 200 L.Ed.2d 433 (2018), the Supreme Court rejected this interpretation "as a useful guidepost for interpreting the FLSA." Instead, "[b]ecause the FLSA gives no ‘textual indication’ that its exemptions should be construed narrowly, ‘there is no reason to give [them] anything other than a fair ... interpretation.’ " Id. (second alteration in original) (citation omitted).

Here, defendant argues that section 207(e)(2) of the FLSA provides the relevant exemption from the regular rate that permits it to exclude the holiday-in-lieu pay. Mtn. at 4. Defendant advances two arguments regarding the exemption; first, the plain language of the FLSA excludes the holiday-in-lieu pay and second, to the extent that the statutory language is ambiguous, recent Department of Labor ("DOL") guidance confirms that the statute excludes the holiday-in-lieu pay from the regular rate. Id. at 4–5.

Thus, the court first considers whether the plain language of either the first or third clauses of section 207(e)(2) are ambiguous. If the statute is unambiguous, then the court's inquiry begins and ends with the statute. Encino Motorcars, LLC v. Navarro ("Encino I"), ––– U.S. ––––, 136 S. Ct. 2117, 2124–25, 195 L.Ed.2d 382 (2016) (citing Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ). Conversely, if the statute is ambiguous, then the court must consider DOL's interpretation and determine what level of deference applies to such interpretation.

1. Whether the Plain Language of Section 207 is Ambiguous
a. Section 207(e)(2) —First Clause

The first clause of section 207(e)(2) permits an employer to exclude from the regular rate "payments made for occasional periods when no work is performed due to vacation,...

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